JLF Research Archive
Showing items 426 to 450 of 584
In North Carolina and 34 other states, if you are a health care entrepreneur and you want to do anything from adding a new wing or extra beds to an existing hospital, to opening an office that offers MRI or other services, you need a “Certificate of Need” from the state. If this sounds like the kind of central planning one might find in a socialist economy – it is. In North Carolina, the central planning authority is known as the Health Planning Development Agency, part of the North Carolina Department of Health and Human Services. The role of this agency is to plan economic activity provided by medical-care facilities. This is done down to the most minute detail, circumventing the most basic function of private decision-making in a free enterprise system, i.e., the allocation of resources based on entrepreneurial insight and risk taking.
North Carolina is the only state in which counties pay a fixed percentage of Medicaid costs. Counties have no control over how they spend up to 15 percent of their general fund budget and 39 percent of their property tax revenues. Six counties spend more on Medicaid than on education. Program expansions and higher medical costs have pushed Medicaid’s share of county budgets up an average of 18 percent in five years. The General Assembly should act on the recommendation of its own Blue Ribbon Commission on Medicaid Reform to cap and reduce what counties must contribute to Medicaid.
North Carolina recently filed a lawsuit going after private restraints of trade. But if the state really wants to reduce unfair trade practices and help consumers, it should eliminate or modify its own anti-competitive policies. The certificate of need law, occupational licensing, and other state-imposed restraints of trade hurt consumers and the economic freedom of North Carolinians.
The North Carolina Global Warming Commission is tasked with examining the relationship between greenhouse gases and climate change, but only one of its 16 members so far is a climate scientist. It is also supposed to study the economic impact of climate change and policy proposals, but none of its members are economists. Rather than experts, the commissioned is stocked with representatives of environmental pressure groups and particular industries. Such a commission is unlikely to propose reasonable, scientifically sound policies — and far more likely instead to advance their own ideologies and bottom lines.
Governor Easley announced that North Carolina will raise its average teacher salary to the national average in three years. Adjusted for cost of living, pension contribution, and teacher experience, however, the state’s average teacher salary ranks 11th in the nation and is about $1,600 above the national average. There is no evidence to support the governor’s contention that a higher average salary will aid in recruiting and retaining a high-quality teacher workforce or will make students more competitive in the global economy. A system of merit-based pay would provide an incentive for highly qualified individuals to enter and stay in the teaching profession.
Many cities and counties in North Carolina and throughout the nation have benefited from the ongoing revolution in solid waste management. Competition in the private sector has led to larger landfills that are better for the environment and less expensive. Only seven North Carolina counties have failed to take advantage of the market in landfill services. When the North Wake County landfill closes in 2007, the county should not replace it with a new county-owned facility. Instead, it should allow cities and towns to find the best value for their citizens in the landfill market.
City and county government cost on average $3,804 per capita in Charlotte during fiscal year 2004, from July 2003 to July 2004. This was 28.1 percent higher than the $2,969 (constant 2004 dollars) per capita spent in fiscal year 1994. For comparison, real per capita personal income increased just 13 percent over the same period, from $24,926 to $28,235. Most of the increased expenditures were for operations, which climbed 23.2 percent to $2,766 in fiscal 2004. Char-Meck’s high capital spending climbed 43 percent over the decade, to $1,038 in fiscal 2004.
The United States Supreme Court’s opinion in Kelo v. City of New London drastically weakened the property rights of all citizens. North Carolinians can protect themselves by amending the state constitution. An amendment is necessary because state legislation does not provide adequate protection of property rights. All fundamental rights, especially property rights, should be protected in the state’s highest law, the state constitution.
Like other states, North Carolina maintains a system of certification and licensing for public school teachers. Proponents of the system argue that certification standards will separate good teachers from poor ones, but there is no evidence that these standards determine teacher quality. A state-by-state comparison of teacher certification and student performance on the most recent National Assessment of Educational Progress (NAEP) mathematics exam shows that certification standards and teacher testing did not improve test scores. Schools should be able to recruit and retain talented teachers whether they are certified or not.
Multi-million dollar bond referendums and tax increases will not repair the damage done by years of inadequate school facilities planning. With construction and labor costs rising, massive school building programs, such as the one proposed by the Charlotte-Mecklenburg Schools (CMS), will exert a crippling tax burden on local communities.
City and county government cost on average $2,863 per capita in Wilmington during fiscal year 2004. This cost was 42 percent higher than Wilmington's per-capita spending in 1994. As real per-capita personal income increased just 13 percent over the 10-year study period, operations costs climbed 35 percent and capital spending nearly doubled over the decade. No large city in North Carolina had faster spending growth than Wilmington did.
North Carolina law limits the establishment and relocation of new-vehicle dealerships in “relevant market areas” where the same make of car is sold. This law was enacted due to the belief that dealers were in an unequal bargaining position with manufacturers. This rationale is now obsolete. Research also indicates that such laws hurt consumers. No justification exists to continue granting special privileges to dealers, especially when those privileges come at the expense of the public.
Despite record high temperatures during the month of July, North Carolina’s metropolitan areas are experiencing a third straight year of relatively few high ozone days. Unfortunately good news doesn’t sell and there are some “environmental advocates” in the state who seem intent on sounding the alarm bells regardless of the facts.
Six weeks into fiscal year 2005-06, the General Assembly has a budget proposal from the conference committee. It includes $17.2 billion in spending (up 7.9 percent from 2004-05), over $700 million in higher taxes and fees, and $681 million in extra collections. This spending is well above the governor's spending cap. A constitutional tax and expenditure limit would provide the best insurance against permanent tax increases from reckless spending.
Northeastern North Carolina is trying to reverse its economic misfortune with two large economic development projects that could pull $8.25 million from the General Fund. Proponents want to avoid the legacy of the Global TransPark, but studies used to justify the projects are based on similarly faulty assumptions. A proposed Advanced Vehicle Research Center draws on no existing regional strengths; an entertainment district relies on transforming the region’s tourism. The General Assembly should not fund either project. Members should be sure to read reports on similar proposals–and read them with skepticism.
From 2000 to 2005, while 105,000 North Carolinians lost jobs in the private sector, state and local government payrolls grew by 46,000 — an increase of 8.2%, 16th largest in the nation. N.C. state and local governments now have 710 employees per 10,000 residents — more than any other state of similar size, including Massachusetts.
In response to a widely cited study by the American Federation of Teachers, Harvard education professor Caroline Hoxby recently released a study of the academic proficiency of charter school students. Hoxby finds charter schools comparing favorably with regular public schools: "charter students are 5.2 percent more likely to be proficient in reading and 3.2 percent more likely to be proficient in math on their state’s exams."
Although state revenue estimates are growing at the rate of about $100 million each month, the North Carolina House managed to pass a $17.1 billion budget that requires even higher taxes than the Senate’s bill. Spending would grow 7.5 percent. Despite this, some representatives claim that the budget is a model of fiscal responsibility because it ties recurring funds to recurring obligations. Fiscal responsibility does not require $778 million in new taxes or $376 million in transfers and new fees. “Reverse logrolling” in the conference is the last best hope for the General Assembly to become responsible.
Once again, the American Lung Association's annual “State of the Air” report misleads the public by exaggerating the data and issuing “grades” meant more to scare than to inform. The ALA claims up to 900 percent more high-ozone days than actually occurred and gives F grades to counties that are having no problem meeting EPA guidelines.
The NC House is considering a bill to raise the state’s minimum wage to $8.50 an hour. While intended to help lower-income workers earn a “living wage,” the more likely result is to boost the earnings of some non-poor workers, including many teens and seasonal workers, while increasing the unemployment rate for many poor and minority workers. Employers will not hire people whose work efforts are worth less in the market than a government-imposed wage. A better policy to boost the earnings of entry-level workers would be to address their educational deficiencies.
Under the Senate’s proposed budget, real spending in the state will grow as quickly over the three years through fiscal year 2007, 13.2 percent, as it did in the three years through FY 2001. The late 1990s benefited from rapid economic growth that allowed the state to cut taxes while spending more. Gov. Mike Easley raised taxes to cover expenses while slowing growth to 0.2 percent in real terms through FY2003-04. Since then, the higher taxes have paid for renewed spending growth. Medicaid spending has expanded more rapidly than education or correction and is accelerating. Growth is faster still outside this core.
The budget proposals from the senate and governor return North Carolina to a path of rapid spending growth. Education and Medicaid continue to expand, but economic development joins them as an important growth area. Government spending on a per capita basis retreated after Fiscal Year 1999-2000, but will be 28 percent higher in FY2006-07 than it was in FY2002-03.
A broad coalition of lawmakers and policy groups favors fundamental changes in NC lobbying laws to require more disclosure, create "cooling off periods" before former officeholders can lobby, and restrict the value of personal gifts to public officials. Still, reformers are overlooking an important issue: the role that special-interest lobbying plays in distorting fiscal policy and stunting economic growth.
Senators deserve a great deal of credit for decisions in their proposed budget to limit dual eligibility for Medicaid and Medicare, reduce the number of teacher assistants in public schools, and remove General Fund support for some activities that should rely on receipts. These changes do not reflect an overall return to fiscal reationality, however. The Senate still increases spending by $1 billion, paid for with fund transfers and big tax hikes.
Freedom Budget 2005 continues the tradition of JLF alternative budgets that revise the governor’s Continuation and Expansion budgets. If an item is not included here, the authors accept the governor’s proposal. This includes all pay raises for state employees and some tax changes. The specific recommendations detailed in this report are made as additions or subtractions from Gov. Easley’s budget.